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Tackling a case with big implications for corporate advertisers, the California Supreme Court sounded ready Wednesday to conclude that so-called “image burnishing” campaigns enjoy more First Amendment protection than pure commercial speech. But in hearing a deceptive advertising suit against Nike Inc. over advertisements defending its labor conditions abroad, the justices seemed to leave the door open for suits based on maliciously misleading campaigns. The case was one of two high-profile arguments on the justices’ agenda, the other dealing with whether serial rapist Patrick Ghilotti can be recommitted as a sexually violent predator despite already having been hospitalized four years beyond his original 12-year prison term. The justices didn’t tip their hand on whether Ghilotti should go free, instead indicating that they’d send the case back to Marin County Superior Court with specific guidance on what standards evaluators must meet in determining whether someone is “likely” to reoffend. “Isn’t it clear that this is a murky area?” Chief Justice Ronald George asked at one point. “The trial court did not even know what standard the evaluators used.” The Nike case began when Marc Kasky brought a private attorney general action claiming that Nike violated state Business & Professions Code � 17200 and � 17500 — which prohibit unlawful business practices and false advertising — when it ran a campaign putting the company’s labor practices in a positive light following reports that it ran sweatshops in Asian countries. Kasky, whose suit seeks injunctive relief and disgorgement of profits, insisted that Nike’s comments were deliberately deceptive and misleading commercial speech. San Francisco’s 1st District Court of Appeal ruled against Kasky in March 2000, saying that Nike’s public relations campaign was protected because it was noncommercial speech that dealt with a controversy of great public interest. On Wednesday, San Francisco lawyer Paul Hoeber defiantly attacked that holding. “Commercial speech is constitutionally protected,” he said, “but the difference that’s relevant here is that commercial speech that is false is not protected.” He also implied that Nike had taken its comments out of the protected realm by using them for an underlying economic motive. In other words, to boost sales. Justice Janice Rogers Brown took exception to Hoeber’s statement, asking him why statements Nike made in its ads would be any less protected than they would if company officials made the same remarks before the state Legislature in an effort to head off legislation regarding sweatshops. “Aren’t they allowed to say that? Isn’t it protected?” she asked. “You are reading something into [the company's statements] to make it commercial.” When Hoeber responded by saying statements can mean different things in different contexts, Justice Marvin Baxter asked whether that means Hoeber believes companies like Nike have less constitutional rights. Such a situation, he added, would result in “a debate with one participant with his hands tied behind his back.” But Justice Joyce Kennard zeroed in on Nike’s allegedly false statements. “Why can’t the state regulate such false and misleading statements?” Kennard queried. “I don’t think we can simply disregard that,” she said later. “That, I think, is the crux of the case here.” Nike’s lawyer, David Brown of San Francisco-based Brobeck, Phleger & Harrison, argued that the company’s protected speech and its policy statements are so inextricably intertwined that any attempt to regulate could chill company executives’ free speech. In the Ghilotti case, the justices are facing the question of under what circumstances the state Department of Mental Health can refuse to release a sexually violent defendant even though he has served his time. Ghilotti, 45, was imprisoned after four assaults in Marin County. He has spent the past four years at Atascadero State Hospital, where state mental health authorities want him to remain for fear he will rape again. Much of the justices’ time on Wednesday was spent discussing language in California’s Sexually Violent Predators Act that prevents state authorities from recommitting a person without two evaluations showing that a defendant is “likely to engage in acts of sexual violence without appropriate treatment and custody.” “What does ‘likely’ mean?” Justice Kathryn Mickle Werdegar asked, wondering if a 50 percent chance would qualify. Sacramento-based Chief Assistant Attorney General Robert Anderson didn’t want to be nailed down to a specific measure, saying it should be a “fluid standard,” but one that means “more than a mere possibility.” Frank Cox, Marin County’s chief deputy public defender, and Ronald Boyer, representing the California Public Defenders Association, said “likely” should mean a 50 percent or greater chance. A lower standard, Boyer said, would mean an “increase in the number of unnecessary commitments.” “We would lock up large numbers of people,” he added, “to get the one person who will reoffend.” On the other hand, Justice Baxter said, a higher standard for recommitment could mean that sexually violent predators could go free to cause more mayhem. “Those percentages play both ways, don’t they?” he said. But Chief Justice George wondered why the word “likely” couldn’t be construed to mean that someone is highly likely to repeat as an offender. “There are statutes that use the term ‘more likely than not,’ and the Legislature chose not to do that here,” he said. At one point, Cox said he thought the terms of the Sexually Violent Predators Act were clear and had been examined by many of the state’s courts. “Certainly,” Chief Justice George interjected, “it is not clear under what circumstances a judge can look at reports, and concerning what ‘likely’ means.” The two cases are Kasky v. Nike, S087859, and People v. Superior Court, S102527. Decisions are expected within 90 days.

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